IMPACT OF COVID 19

PANDEMIC ON THE
BANKING SECTOR

TEAM NEW WORK

 Table of Contents

01 INTRODUCTION
04 EFFECT IN NPA

02 CHANGES IN
TRADITIONAL
BANKING
05 RBI MORATORIUM

03 LIQUIDITY CRISIS
06 IMPACT

07 CONCLUSION
 INTRODUCTION

COVID-19 was one of the most tragic period of

human has ever seen. It was a deadly pandemic
which spread very fast across the world. Due to
which the sectors of economy got affected and
with that the banking sector which support all
the three sectors also got affected.
TRADITIONAL BANKING

• Physical presence.
• Regional headquarters where they
are active.
• Own branded ATMs
• Large number of employees
• Face- to- face or one-to-one customer
service.
 EFFECT OF COVID-19 0N NPA
• Outstanding loan against tourism
• Increase in NPA
• Among the groups, GNPA ratio of public sector banks may increase from 11.3
per cent in march 2020 to 15.2 percent by march 2021 under the baseline
• Bank total asset might fall to maintain the required CAGR under the scenario
of a 3D shock to the GNPA ratio
Measures to tackle NPA crisis

• Reduction of policy repo rate by 75 basis points (from current 5.15% to

4.40%).
• RBI will conduct auctions of TLTRO (Targeted Long Term Repo
Operations) of up to three-year tenor of appropriate sizes for a total
amount up to INR 2 lakh crore (-USD 26 billion) at a floating rate
• CRR of all banks to be reduced by 100 basis points to 3% beginning
March 28, for 1 year.
• Liquidity coverage ratio for banks reduced from 100% to 80% likely to
release liquidity.
• These liquidity measures will inject liquidity of INR 4.74 lakh crore (~USD
63 Billion )to the system.
 Impact on Public Sector Banks

• Suspended services due to lockdown meant reduced capacity

which further meant Deposit base for many banks fell short
• Non essential services- new loans, project appraisals or
reworking existing loan terms were suspended
• Mergers of many PSBS happened to form 10 large Public banks.
• Unsecured retail portfolio accounts for 6.3% for public sector
banks (PSBs)
Impact on Private Sector Banks

• Unsecured retail portfolio accounts for 16.6% of

the total bank credit
• Top 10 private banks declared nearly 76% of their
pre provisioning operating profit as provision for
the next quarter
• Drop in Standalone net profits were quite visible
even in top private banks.
• Axis unexpected losses neared Rs 1,000 crore
 CASA RATIO

Bank As on April 31,2020 As on march 4,2021

Kotak Mahindra bank 57.1 53.7

Bank Of Maharashtra 50.51 50.29

Idbi bank 48.33 47.7

Axis bank 44.2 39

PNB 44.1 42.97

IDFC First 33.7 24.1

Measures Announced by RBI on March
27th, 2020..

• 3 months moratorium on repayment of loans

• Relief from increment in existing interests
• Banks and NBFCs are permitted to execute the on
repayment of term loans outstanding on 1st March
2020.
Updates from October 2020...

• The moratorium period on repayment of loans

is extendable
• Passed an interim order saying that accounts
not declared as NPAs as on 31st August shall
not be declared so till further notice
• SC has asked the GOI to waive "interest on
interest charged on loans of up to Rs 2 crore
 CONCLUSION

• RBL Bank’s Head of Branch Banking Surinder

Chawla said, “The adoption of advanced digital
channels across business segments grew by 98% in
2020, indicating the immense significance we
attach to our digital journey.
• Last year, the National Payments Corporation of
India approved a WhatsApp proposal to allow
users to transfer and receive money through the
messaging app.
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